Intel comes up with new wishlist for India plant

Seeks 100% IT exemption for 15 yrs; free land; Rs 200 cr unsecured loan from the government.

Global chip manufacturer Intel has revived its earlier proposal for setting up a wafer testing facility in India at a cost of $ 700 million but has now sought, among other incentives, a Rs 200 crore unsecured loan from the government.

The company, which is exploring the option of setting up the facility in Chennai, has reiterated its earlier demand of free land, 100 per cent exemption from income tax for 15 years and exemption from dividend distribution tax and fringe benefit tax.

A high-level team of the company led by its India chief Frank Jones today made a presentation on their proposed plans and outlined their demands before the Finance Minister P Chidambaram and IT Minister Dayanidhi Maran.

Senior government officials said a decision was taken at the meeting that IT Secretary Brajesh Kumar would interact with the company and see which of their demands were feasible.

The company on its part is understood to have said that it was willing to begin due diligence and was targeting to complete the negotiations by March 2006 and set up the facility in the second quarter of the calendar year.

Chidambaram is reported to have urged the company to take a decision to invest quickly and push its plans ahead for setting up the facility.

It might be recalled that in September last year, the company had informed the government that it was putting its plans for setting up the wafer testing facility on hold following the government's reluctance to grant it exclusive incentives.

The company had sought several concessions including unlimited access to external commercial borrowings, tax waivers and an upfront payment of $100 million.

Officials said that the finance minister once again reiterated that the company should consider setting up a manufacturing facility rather than just undertaking back-end operations as wafer testing does not involve high value addition.

"The likelihood of the facility being set up in a special economic zone appears to be slim since the concessions the company is seeking are more than what is available to other firms in SEZs. Agreeing to their demands could set a precedent for other foreign companies demanding similar concessions for setting up their operations in the country," the officials added.

The company had identified a special economic zone near Chennai as a possible site for setting up the facility. The investment was to be spread over four phases with the first phase involving an investment of $ 250 million, and $ 150 million each in the remaining three phases. The first phase is expected to generate employment for 1,000-1,200 persons.

The wafers are used in industrial power controls, elevators, thermometers, consumer low-end electronics and communications devices. The Intel India Development Centre in Bangalore is the company's largest non-manufacturing set-up outside the United States.

WHAT IT WANTS

Rs 200 crore unsecured loan from the government

Free land

100% income tax exemption for 15 years

Exemption from dividend distribution tax and fringe benefit tax